Plans compete to deliver energy efficiency services

(Host) What’s the best way to deliver energy efficiency services to homes and small businesses?

That’s a question raised by the two competing plans that lawmakers will consider next month.

One plan put forward by the governor is based primarily on a loan program.

The bill he vetoed would have provided $4 – $5 million annually in grants for energy improvements.

VPR’s John Dillon reports:

(Dillon) After Governor Jim Douglas vetoed the Legislature’s global warming bill, he said his own plan would cost less and do a better job providing energy conservation services.

The governor’s proposal builds on home weatherization programs run by non-profit anti-poverty agencies. Administration Secretary Michael Smith came up with the idea.

(Smith) “I think there’s a capability here to almost double our existing weatherization program and do it without creating a new bureaucracy, because we have the existing resources in place, and do it without raising taxes. And I think this is a sound approach.”

(Dillon) Smith says that households of four people with an annual income of about $41,000 could get direct grants to make their homes more energy efficient.

A family of four with an income of $41 to $62,000 would qualify for no-interest loans. Those with higher incomes would receive low interest loans. The state would provide about $3 million to help protect against loan losses.

But critics say the governor’s program is flawed, because it’s based primarily on lending money rather than providing incentive grants for energy improvements.

Tim Searles works for the Champlain Valley Office of Economic Opportunity. He says a family of four earning $41,000 a year already qualifies for free weatherization grants.

Searles says lending money to help people save energy has been tried many times before, with mixed results. He gave the example of a program run by the Vermont Gas utility.

(Searles) “Vermont Gas covers one-third of the cost through a rebate. It offers two-thirds financing at no interest over the subsequent three years. That program has been in place for a long time and it’s being under-utilized as are all the other existing low or no-cost loans available for energy efficiency work.”

(Dillon) Searles serves on a new task force that is helping the administration design the program. He hopes it works, but he has some doubts.

(Searles) “The concern is to a certain extent we’re re-creating the wheel here. And the wheel that’s being re-created hasn’t been particularly effective in delivering energy efficiency services up to this point.”

(Dillon) John Plunkett is an economist who has worked as a consultant for the state and Efficiency Vermont, which works to cut electricity use.

Plunkett says the reason the loan programs aren’t widely used is that people are reluctant to take on more debt.

(Plunkett) “People have generally when offered a choice between a loan and an incentive, choose the incentive.”

(Dillon) Efficiency Vermont provides both cash incentives and low cost loans. The bill that the governor vetoed would have allocated about $4 to $5 million a year for these kinds of incentives.

(Plunkett) “The real mystery is if loans are the answer why isn’t E-VT just loaning money for all the stuff we’re doing? The reason we’re not is because loans aren’t enough. Why it would be any different for fossil fuels than electricity is a mystery to me. And there’s no evidence to support the notion that it would make a significant enough difference.”

(Dillon) But Administration Secretary Smith says people will figure out they can save money over the long term by borrowing to pay for the energy work.

(Smith) “Vermonters are pretty smart, and they know what this will do and they know over the long run this accrues a significant savings to them.”

(Dillon) But critics question the administration’s real commitment to the weatherization programs. They say the administration this year tried to cut $750,000 from the program, but the Legislature restored the funds.

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